Church Donation Software – Audit List

It is that time of year when many non-profits like churches provide contribution statements to their donors. It is also a good time to assess if the current solution is able to give these statements easily, quickly and has majority of the features that are still important to the church. Over time, software becomes outdated or the organization’s needs change. What features would the church like to have that they currently don’t?

Having the ability to email statement to save money in these hard economic times and use it for more worth wild missions is an important consideration. For example, a church with 150 active donors that send quarterly statements would spend $264.00 annually in postage. This total does not include envelopes, labor, and labels associated with mailing the statements. Does the church software provide a return on investment and pay for itself each year it is used?

Having different options during the preparation of statements is an important consideration. Below are some items to audit, but feel free to create your own list and then audit the current solution and compare it to others.

For example, does the software have the ability to:

•     Create different statements for the givers and non-givers?
•     Follow the government regulations?
•     Print statements based on status codes of the members?
•     Print the pledge amounts?
•     Print tax-deductible, taxable and IRA funds separately?
•     Print check numbers on the statements?
•     Print comments for Gift in Kind contributions without a monetary value assigned?
•     Provide different formats for the contributions statements?
•     Format statements for windowed envelopes?
•     Print labels to match the statements?
•     Include a church logo?
•     Include a custom thank you letter at the bottom?
•     Email statements to specific email addresses for each member?
•     Produce statements quickly (eg: under 30 seconds for a mega church)?

Creating an audit list that the church can use to audit their current solution and compare it should be the first objective when reviewing church donation software. Additionally, churches need a software package that includes more than tracking church donations, which means a similar audit list should be made for membership and the accounting areas of ministry.

Church Office Software – What Makes it Different?

Church office software has various shapes and sizes. It is appropriate to distinguish between “church software” and “church office software”.

“Church Software” – is any type of computer software specifically designed for use by a church”. Church software can encompass different types of software such as: bible verse, media production, donation, accounting, mass emailing, sermon, worship, and music software.

Church Office Software is one of the sub types of church software. Typically, the secretaries and financial staff use it in the office. Examples of this type of software are membership, contribution, accounting, newsletter generation, office communication tools, word processing, and spreadsheet software. The software is the heartbeat of the organization. For example, churches can still do their mission if they did not have music or media production software. Conversely, if they do not pay their bills or record donations the church doors will not be open too long.

Church office software is so vital to the mission of the church in keeping it running and the doors open, would it not be beneficial to ensure you choose one that fits your organization and still obeys government guidelines (e.g. IRS, FASB, etc). If the church could choose one thing to be correct within their organization what would it be? Most churches would choose to have the financial books correct. After all, if the church sings the wrong song on a Sunday the IRS won’t be there on a Monday issuing a violation.

Most churches realize the importance of correct financial books; however this area of ministry comes second to all the other activities in the church. When reviewing software, churches focus on the integration of membership or building a community. While these are important, they will not keep the organization out of trouble like having correct financial records. Choosing software that keeps you in check with government agencies first while building a community is the best way to start looking at software packages. It is safe to say that if the software does not have accounting included it is not worth looking at as a complete Church Office Software.

Churches some times fall into the trap of software longevity. Icon Systems can honestly say a company’s longevity in the market is not a good indicator of following the guidelines for financial reporting. If the church is unsure we recommend they do their due diligence and investigate the financial reporting requirements. A good start is to review the blog about “Fund Accounting Methods Compared“. The post discusses scenarios of incorrect guidelines according to FASB that are used in the church software industry.

While all church software is important, if certain software is not used the organization can suffer dire consequences. An organization can lose their tax-exempt status when audited with incorrect financial statements according to the FASB guidelines. Whenever there is uncertainty about proper financial reporting of money within a church, distrust spreads within the organization’s members. An organization using a FASB compliant system like IconCMO cloud base solution can be assured they are within guidelines.

Postal Service May Eliminate Non-Profit Discount.

The Postal Service (USPS) with the help from Rep. Darrell Issa is trying to eliminate the 40% discount for mailing that non-profits enjoy. HR2309 is the law that Congress is trying to pass which would eliminate almost all but 10% of the non-profit discount within 6 years. At Icon Systems, we forecasted this years ago when the postal service was recording annual losses and trying everything to increase revenue to cover their expenses. This bill will increase the burden on churches and other Postal Service patrons. Many church software companies were trying to get their church software PAVE/CASS certified, but these can only reduce postal costs when a discount is available. In some cases, these certifications may increase costs. With the use of electronic communication, churches can reduce or even eliminate these costs.  Providing newsletters, contribution statements (IRS statements), and other communications through electronic means within IconCMO or our partners is an easy way to save precious donations for other critical items in your church.

While we feel the elimination of the discount will not help the USPS solve their financial issues, it will strengthen each church’s resolve to use electronic communication more effectively.  Non-profits will turn to newer technology and limit their use of the USPS. Icon System’s IconCMO church software is available to help churches use these technologies: cutting costs and ensuring that the church saves time, money and resources each year.

6 Steps to Maintaining your Church Tax Exempt Status.

Lauren Hunter did a wonderful write up of what to look for in church software. Please read the full article. Below is just a summary of some of the information you will find.

Know what regulations pertain to churches and what organization creates them. Understand and know why you cannot keep balances in the revenue and expense accounts. Additionally, liabilities should not have fund balances because liabilities are money owed and not money the organization owns. Does church size matters when it comes to accuracy of church reporting or does the church have to report the financials at all?  There are two major repercussions of having bad financials. One is moral and the other is legal.  When an organization is out of compliance trust is lost in the community, which is the moral issue and is very hard to recover. The other is the church can lose its tax-exempt status and cannot claim to be a tax-exempt organization legally. Find out where to go to get more information. Tell us what you think.